While merger and acquisition activity has been slower than expected in the first half of the year, analysts expect it to rebound, especially in certain sectors. Private capital assets are growing, with the largest firms achieving double-digit growth, and family offices are providing an influx of capital, according to a recent PwC report.
Investors are increasingly betting on renewable energy companies to fund a transition to more sustainable sources, creating more M&A opportunities. And in the healthcare sector, physicians’ groups, dental offices, fertility clinics and other outpatient service providers that had been independent are becoming part of larger groups, creating opportunities to streamline everything from accounting and administration to technology platforms.
Whether you’re an executive of a company looking to be acquired or you’re leading one that was recently acquired, evaluating your technology platform should be a top priority. Here’s why.
The importance of a scalable foundation
Long-term scalability is key to any successful M&A deal.
This applies to your product, sales pipeline and marketing initiatives, as well as the technology underpinning it all.
The longer your enterprise operates under disparate software systems after a merger or acquisition – specifically, single-entity accounting solutions such as QuickBooks Online, QuickBooks Desktop or Sage 50 – the more difficult it becomes to scale later.
You won’t have consolidated financial reports ready to share for potential investors or internal stakeholders. Instead, someone from your accounting team will need to spend hours creating these reports manually by copying and pasting information from different systems each time you need to analyze performance or make decisions about your company’s next priorities. This is not only efficient; it invites greater opportunity for error.
A scalable accounting solution provides a unified platform for all financial operations within your enterprise. This gives your company real-time data visibility and streamlined reporting, enhancing efficiency and reducing operational costs.
Managing intercompany transactions and shared vendors
One possible advantage of private equity ownership is the ability to make purchases on behalf of multiple companies in the organization — anything from computers to insurance or basic office supplies — with the companies reimbursing the purchaser via intercompany transactions.
This saves money because of the potential for negotiating bulk discounts and creates efficiency because the administrative burden of finding and procuring supplies only happens once, rather than many times across locations.
Unfortunately, most legacy accounting solutions require a separate database for each company within an organization, negating the time and cost savings.
Prior to adopting Gravity Software, settling intercompany transactions for hospitality enterprise Sunray Companies took multiple days. This is because a single transaction required as many as five journal entries across multiple databases, each requiring a separate login. Gravity’s multi-entity solution cut the time spent on intercompany transactions down to about 30 minutes.
Failing to centralize your enterprise’s accounting system after a merger or acquisition leaves two options: resigning your team to tedious, error-prone processes, or foregoing any transactions that require intercompany billing.
Managing vendors with legacy software is just as frustrating. Each vendor, even those held in common throughout the enterprise, must be entered into each company's database individually.
By streamlining your technology stack after a merger or acquisition, you can avoid some of the pitfalls of managing vendors and transactions for multiple companies at once. With Gravity Software, you'll enter or update a vendor's information once, then click a few buttons to share that information with other entities within your company. This leaves little to no chance of your system containing multiple versions of the same vendor information.
Tracking vendor performance can give you leverage to negotiate better rates and terms, but only if your performance data is complete and accurate. A unified accounting solution allows you to slice and dice numbers such as pricing, timeliness of deliveries, additional fees and more to ensure that you're receiving a high level of service across the board. And if you're not, you have the tangible data to do something about it.
Vendor performance data can also help drive strategy. You can easily see which vendors drive your best results and which ones you may need to reconsider.
Addressing geographic and regulatory challenges
It's hard to attain a diverse portfolio if you stick to one geographic region. But expanding your enterprise nationwide or globally isn't without its challenges.
Managing operations for different companies across a large geographic area means operating with different regulations, tax guidance, reporting requirements and even currencies. Your accounting solution needs to accommodate all of these factors.
Different countries, states and localities have different regulations for when, how and what metrics you report. Navigating those regulations is much easier when you have a centralized accounting software solution.
Gravity’s robust reporting tools ensure you'll be able to create on-demand, comprehensive, visually digestible presentations most relevant to your stakeholders and regulators. And its automated updates mean you'll always have the means for compliance in an ever-changing regulatory landscape.
Efficiently managing a remote workforce
An enterprise that has increased its geographic footprint after a merger or acquisition will have a widely distributed workforce, including hybrid and remote workers. To manage it effectively, you'll need the right technology.
Communication, including sharing data, is key in any work environment. Stakeholders need visibility into areas such as purchase orders and requisitions, vendor information, expenditures and revenues, inventory information and more.
Equally important is that all of this information be up-to-date. If the graphics team in Tulsa makes changes to their request for a new printer, for instance, the procurement department in Seattle needs to know about those changes before they send the purchase order to the vendor.
Decisions are made across all divisions of a company, based on the information available at that moment, so the information needs to be accurate at all times.
A cloud accounting solution like Gravity Software means stakeholders can access the full system from any location. They can share data in real time, create consolidated reports and, for those instances when direct conversation is needed, collaborate using the seamlessly integrated Microsoft Teams and Outlook.
Real-time access means better and faster decision-making, more time spent on meaningful work, less time chasing down information, and smoother collaboration among team members, no matter where they are.
Case Study: Successful scaling with Gravity
Brandon Capital experienced the pitfalls of an accounting system that isn't designed for multi-entity enterprises. Seeing how long it took her accounting team to compile reports – five to six days – and how heavily they relied on Excel queries for those reports, CFO Amy Perkin knew the private equity firm couldn't thrive while using Xero Accounting Software.
Switching to Gravity Software resolved those frustrations, allowing Brandon Capital to continue investing in innovative healthcare companies without having to worry about the deal volume overburdening their team.
For instance, they can:
- Use multi-currency accounting with automated exchange rate updates
- Accounting automation features to free up team members for more strategic work
- Integration with Jet Reports to further streamline reporting and Microsoft Power BI to easily present essential business performance data
Learn more about Gravity Software and its potential for streamlining technology after a merger or acquisition. Schedule a demo today.
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